Virginia Unpacked: The Ongoing Dispute Surrounding Skill Games

Quick Intro

Despite repeated attempts, Virginia’s bans on skill games, led by Pace-O-Matic, have not lasted. These games, likened to slot machines, have been a legal battleground for five years, with no regulation or taxation due to a lawsuit until a Supreme Court decision last year upheld the 2021 ban.

The industry is now lobbying for legalization under new regulations, with significant support from lawmakers and business owners who rely on the revenue. The debate in the General Assembly is not about the existence of these machines but their regulation level.

The Senate proposes a bill with industry-favored lighter rules, bypassing the usual gambling committee. In contrast, the House suggests stricter regulations, including local approval. These proposals must align for Governor Glenn Youngkin’s approval, who has shown past support for skill games.

Who supports the machines?

Advocates, including gas station and restaurant owners, argue the ban harms small businesses, especially those owned by first-generation immigrants. They stress the economic support these games provided during the pandemic. Pace-O-Matic, a major market player, actively promotes the bill, highlighting its impact on small businesses. Their effort is influential, with the company and its affiliates donating significantly to Virginia politicians.

Who rejected the machines?

Opposition comes from the casino industry, which sees skill games as competition, and from other gambling sectors. They argue for equal regulation and express concerns about the potential exploitation of vulnerable community members. The casino industry and others, like the socially conservative Family Foundation, argue that Virginia should not expand gambling, even with strict regulations for skill games.

Is it type of gambling?

Skill games are deemed illegal gambling under Virginia law, with some hotline callers saying these games fuel their addiction. The proposed bill for their legalization includes funding for gambling addiction resources, acknowledging the risk but disputing the gambling label.

Industry proponents argue skill games, unlike traditional gambling, allow skilled players to consistently win, challenging the perception that these games equate to casino gambling. Sen. Louise Lucas differentiates skill games by their reliance on player ability, not chance.

Yet, experts like Carolyn Hawley from Virginia Commonwealth University see no distinction between skill games and slots in terms of addiction risk, criticizing claims of beatable games as misleading and harmful. State law defines gambling based on the uncertain outcome of wagers, supporting arguments that skill games, where outcomes involve chance, fall under this definition.

Sen. Jeremy McPike and others see skill games as gambling, given their operation and the reliance on luck. The games, particularly Queen of Virginia’s tic-tac-toe-style play, require player interaction but still involve chance, especially with higher bets and rarer symbols not always ensuring wins.

JeffTheHokie, a YouTube user, claims to have a strategy for consistent wins on these machines through a memory subgame, suggesting a method to offset losses, a claim met with skepticism but highlighting the debate over skill versus chance.

Despite assertions of beatable games, the industry’s survival suggests few players utilize strategies like JeffTheHokie’s. The debate focuses on whether the technical setup that allows for potential consistent wins justifies categorizing these games differently from traditional gambling.

Pace-O-Matic disputes claims that the memory game’s design is to deter use, leaving the question of skill games as gambling unresolved amidst differing opinions on player experience and game design.

What is the cost?

Advocates for skill games estimate that a 15% tax on the industry’s gross revenues could yield up to $200 million annually for state and local governments, suggesting total revenues might reach $1.3 billion annually.

The proposed legislation would permit up to five skill machines in each licensed restaurant or convenience store, and truck stops could have up to ten. Unlike other proposals, this bill sets no statewide limit on the number of machines, leading to concerns from casino lobbyists about the potential for up to 90,000 machines, far exceeding the slightly over 10,000 machines reported during a previous period of regulation.

There’s discussion among lawmakers about setting limits on bets and winnings. The Senate’s preferred bill proposes a maximum $5 bet and a $5,000 top prize.

In contrast, a House-approved alternative suggests tighter restrictions, with bets capped at $1 and the highest possible win at $500 per game. This House bill, introduced by Del. Paul Krizek, also proposes fewer machines at each venue—maximum five for truck stops and two for convenience stores—and seeks a higher tax rate of 30%, doubling what the Senate bill suggests.